Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2017

Sales and Use Tax Annotations

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Annotation 440.0380


(4) Paper Products; Explosives—Chemicals Used In Manufacture Of

440.0380 Explosives. "A" purchases concentrated sulphuric acid from "B," a California supplier, ex-tax and makes the following uses thereof:

(1) Mixes the acid with other acid and sells the mixture to its customers, "C" and "D," who use it as a dehydrating agent.

(2) Uses the acid in its own manufacture of nitroglycerine, or other processes, as a dehydrating agent.

(3) After use of acid in (2) above, "A" sells the diluted acid back to "B" for reconcentration and resale to the trade, or

(4) Uses diluted acid in manufacturing fertilizer, or

(5) Reconcentrates the acid and again uses it as in (2). No taxable use is made of the acid in (1), it being incorporated into a product being resold, but the sales to "C" and "D" are not sales for resale.

The use in (2) as a dehydrating agent is a taxable use even though the acid may be later resold.

The sale back to "B" in (3) is an exempt sale for resale.

Where "C" and "D" sell diluted acid back to "A" who resells it directly to "B" the sale to "A" is exempt.

Where "C" and "D" sell diluted acid back to "A" for use as in (4), the use is exempt since the acid is added solely for the purpose of adding sulphate ions as a component part of the fertilizer (ammonium sulphate) to be manufactured and sold. But if "A's" use is as in (5), it is a taxable use. 3/3/53.